Business strategy and healthcare

Is a Single-Payer HealthCare System Viable in the United States?

As we discuss the goods, the bads and the uglies and possible failures of the Affordable Care Act (ACA), there is a fallback discussion of a Government-run, single health care system is back in vogue. It seems to be the fallback strategy if the ACA fails. The Senate had a series of hearings a few weeks ago on the single-payer systems of other countries. They had no problems in finding witnesses touting their supposed benefits. But let us look carefully at the reality of the single-payer health care system. Some states are already pushing for a single-payer replacement for the ACA such as Vermont and Hawaii. They as well as proposals from New York, California, Pennsylvania, Minnesota and Colorado offer up single-payer systems within their borders to replace their state’s failing exchanges.

The single-payer proponents cite the Canadian health care system as an example as proof of a superior system. Sally Pipes of the Pacific Research Institute, on Wednesday, April 23, 2014 wrote an article reviewing this statement. She is a native of Canada and from her first-hand observation points to the reality of the plague of poor quality care, long waits, rationing, scarcities of vital medical technologies as well as unsustainable costs. “To keep a lid on healthcare costs, Canadian officials ration care. As a result, the average Canadian has to wait four-and-a-half months between getting a referral from his primary care physician to a specialist for elective medical treatment — and actually receiving it.”

It is interesting that in Boston, their patients face the longest wait times for an appointment in America, according to Merritt Hawkins, a consulting group evaluating health care. Remember that Massachusetts was the first state essentially enacting an adaption of the ACA in 2006, four years before it went national as part of their own affordable care system. Compare this, where the average wait time in Boston is 45.4 days, which is about three months less than in Canada.

We think that the definition of “elective treatment” refers to facelifts, Botox or tummy tucks. However, in Canada the elective type of treatment actually refers to life-or-death procedures like neurosurgery, orthopedic and cardiovascular surgery.

Consider that these wait times are only growing longer and longer. The average 18-month wait time in Canada today is 91% longer than in 1993.

I also mentioned that Canada has a severe shortage of essential medical equipment. Canada ranks 14th among 22 Organization for Economic Co-operation and Development (OECD) countries in MRI machines per million people, with an average wait time to use one at just over eight weeks. The United States, by contrast, ranks second in medical technology.

Canada ranks a dismal 16th of 23 OECD countries in CT scanners per million people, with an average wait time of over 3.6 weeks. The United States ranks fifth in comparison.

Every Canadian is technically “guaranteed” access to health care. But long waits and the scarcity of medical technologies leave many untreated.

When people aren’t treated in a timely fashion, their conditions worsen, and they often end up requiring significantly more expensive and extensive treatments.

The Center for Spatial Economics, a Canadian research organization, estimates that wait times for just four key procedures — MRI scans and surgeries for joint replacement, cataracts, and coronary artery bypass grafts — cost Canadian patients $14.8 billion every year in excess medical costs and lost productivity. Also realize that most of the advanced cardiac surgical procedures are performed in the US due to wait times and lack of up-to-date technologies.

Once Canadian patients finally receive treatment, it’s far from “free.” Their government levies heavy taxes to pay for the system. According to Nadeem Esmail, a scholar at the Fraser Institute, a Canadian think tank, “Some 68 per cent of personal income taxes paid in aggregate are required to cover the cost of Canada’s taxpayer-funded health care program.”

Patients may only have to pay a nominal fee when services are rendered. But the typical Canadian family pays about $11,300 in taxes every year to finance the public insurance system. The same is true in other countries with a single payer system such as the Scandinavia, where the income tax is 64% and in the British Isles where the Value Added Tax is about to raised fro 17% to 27% to fund their increasingly more expensive health care systems.

Vermont is experiencing this high-tax reality firsthand, as it prepares its single-payer system. One Democratic state representative has admitted that the system will “cost more” than the initial estimate of between $1.6 billion and $2.2 billion annually. Avalere Health, a consultancy, estimates that Vermont will have to essentially double its tax revenue to pay for the system.

Because of the low quality of care and long waits in their home country, an enormous number of Canadians travel to the United States to receive medical attention. In 2012, over 42,000 crossed the border to do just that.

Many of these border-jumpers are part of Canada’s political elite. The national healthcare system may be good enough for their constituents, but it’s apparently not good enough for them. Does this sound familiar?

Former Member of Parliament Belinda Stronach spent her career vigorously opposing privatization of the national health system. But when she was diagnosed with breast cancer in 2007, she flew to Los Angeles for surgery.

In 2010, the premier of Newfoundland flew to Florida for heart valve surgery. When questioned about the decision, he said, “This was my heart, my choice and my health.”

Millions of ordinary Canadians would surely love to have that option of utilizing the best specialists in the world.

Canadians know their system isn’t all it’s cracked up to be. Anne Doig, former head of the Canadian Medical Association, has called the system “sick” and “imploding.” Dr. Brian Day, an orthopedic surgeon in Vancouver who runs the private Cambie Clinic has quipped that Canada is a country where a dog can get a hip replacement in less than a week — but his owner would have to wait two years.

Canada’s single-payer system isn’t one America should long for — it’s one we should strenuously avoid.

There was an interesting article in the Financial Times by Janan Ganish, announcing the new chief executive for England’s “troubled” National Health Service. The new chief executive, Simon Stevens, who served the former Prime Minister Tony Blair, spent the last six years in the U.S. running United Health Group, a major insurance company that serves more customers than the population of the U.K. He believes in market inspired techniques such as competition and in using data on costs, doctor performance, and treatment effectiveness to “empower patients and reduce waste.”

Chris Smyth in The Times comments, saying that, according to a new report y the King’s Fund health foundation, that “we can either continue with a “failing system” of rationed, sometimes substandard care, or increase funding through higher taxes or charges for doctor’s appointments and emergency room visits-i.e. the increase VAT, co-payments and or raising the cost of prescription drugs. So how good is this example of “free” health care????

Again, I warn the U.S. and especially the “educated voters”, be careful what you wish for! Based on the other health care systems being used by the countries that we think are better than our old and present health care system-they are not better. That is unless we want to suffer the plague of poor quality care, long waits, rationing, scarcities of vital medical technologies as well as unsustainable costs. Wake up, it is already happening!

To learn more about the Canadian health care system read Sally C. Pipes the President, CEO, and Taube Fellow in Health Care Studies at the Pacific Research Institute. Her latest book is “The Cure for Obamacare” (Encounter 2013).